Apple started 2014 with a diverse lineup of iPods and iPads in multiple sizes, but the company still only makes one form factor of iPhone. Here's how the company's iPhone 5c experiment has helped it to develop the operational sophistication needed to produce multiple sizes of iPhone.

From one $400 iPod model in 2001 and one $500 iPad model in 2010, Apple has incrementally expanded its offerings to create a range of iPods from the $50 iPod shuffle to the $400 64GB iPod touch, and a range of iPads from $300 entry level iPad mini to the most expensive $929 128GB 4G iPad Air.

In iPhones, however, Apple continues to sell one basic model that starts and ends at essentially the same prices that the iPhone debuted at. For the last several years, Apple has sold one new iPhone and two previous years' models each year. This stands in marked contrast to other handset manufacturers that have long offered everything from very cheap to very expensive phones, very large to very small phones, all in a very diverse array of wildly different form factors and colors.

iPhone 5c: "For the colorful"

Last fall, Apple introduced a slight tweak to its product lineup by differentiating its "last year's" model as "for the colorful," with a new design and minor enhancements. This appeared to be an experiment in handling multiple product lines, and a progression of the 2012 strategy that launched multiple colors of the company's iPod touch. As the world's largest volume manufacturer of premium smartphones, the introduction of multiple iPhone 5c colors was a significant new challenge for Apple.

While Apple sold around 26 million iPods in 2013, only about half were iPod touch models. That means Fiscal 2013's iPod touch color experiment involved operational management of around 13 million devices.

In contrast, Apple sold over 150 million iPhones that year, which helps explain why the company took a slow and cautious step toward releasing just three color finishes of its high end iPhone 5s while focusing its broader color experiment on the refreshed, cheaper iPhone 5c, which it knew (or at least certainly had to have hoped) would make up a minority of its total iPhone sales for Fiscal 2014 (which at the end of March is now half over).

Rather than being a flop and grave mistake as Apple's critics have sought to insist, iPhone 5c was an iterative learning experiment that helped Apple perfect its operational management and large scale production of multiple iPhone models on a global scale. While iPhone 5c's multiple models were differentiated by color, the lessons Apple learned apply to any sort of product variation, including the parallel production of multiple sizes of new iPhones.

The phone industry's exceptional underdog

While Apple quickly took over the high end of phones, it's useful to keep in mind that the company has only been in the phone business for 7 years. It has never sold a large percentage of all the world's phones or even all the world's smartphones, particularly when the definition of smartphone is expanded to include hundreds of millions of extremely low end devices with outdated specs, poor performance and reflect the simple user behaviors of basic phones the industry used to call "feature phones."

After releasing iPhone 4 in June 2010, the company struggled to perfect the production of its planned white version until April 2011. That highlights the complexity of the product development and operational challenges involved in managing the production of devices on the scale of iPhone.

Within 2010, while it worked to develop a white iPhone 4, Apple's iPhone sales hit 47 million, or less than a third the number Apple currently produces. The jump from April 2011's white iPhone 4 to multiple colors of iPod touch in late 2012, and then multiple colors of iPhone 5c a year later show a rapid ramp, not just in technical competency but in managing complexity while volume production quickly escalated in parallel, from a few million white devices to tens of millions of iPhones in a range of colors.

That operational sophistication relates to more than just mass producing precision devices in multiple colors; it also applies to other variations, including the iPhone's first major departure from a "one size fits all" product lineup. In order to build multiple sizes of iPhones, Apple needed to rapidly develop the same sort of expertise that much larger, more experienced phone makers like Nokia, Samsung and Motorola had gained from building broad ranges of products for many years.

Apple becoming the new Nokia

In 2006, Nokia had over 65,000 employees and Motorola employed over 66,000 people. Not all of those were working on phones, but compared to Apple's 20,000 employees (including temp workers and contractors), Apple was clearly a far smaller company. On top of that, a significant number of Apple's employees worked in hundreds of retail stores, something neither Nokia nor Motorola had.

Today, Apple has over 80,000 employees, of which more than 26,000 work in U.S. retail alone. So despite incredible growth, Apple currently continues to be about the same size as Nokia and Motorola were before the iPhone appeared.

The big difference is that Apple is earning far greater profits than Nokia or Motorola ever did, because it isn't using its similar number of employees to design, test, market and sell a vast portfolio of products at increasingly razor thin margins, the way that Samsung currently is.

Samsung's status quo is a strategy that quickly drove Nokia and Motorola from leading, profitable mobile firms to today's "discontinued operations" that are now being sold off as scrap after posting quarter after quarter of massive, million dollar losses.

Apple is selling affordable luxury. In phones, Apple is exclusively selling premium models at prices above $400, far higher than the average selling price of Nokia, Motorola, Samsung or anyone else in the industry.

Going forward, Apple is not only tasked with adopting more of the product diversity of other phone handset makers, but must also maintain its current profitability to avoid suffering the business implosion, financial losses and employee layoffs that Nokia and Motorola have both suffered. It's not surprising why Apple refuses to follow the hindsight-driven guidance of today's financial analysts to dictate its business decisions.

How easy will it be for Apple to muscle its way into the larger screen phone market pioneered by Motorola and Samsung? While we have to wait for Apple's new products to launch and then wait a bit longer for the sales numbers, there is already convincing evidence that should leave Android makers very concerned. The next segment will look at what's involved in the trend toward new sizes of phones, and how the groundwork laid by iPhone 5c in moving Apple into more direct competition with its phone industry competitors has historical precedence.

After releasing iPhone 4 in June 2010, the company struggled to perfect the production of its planned white version until April 2011.

Mark Papermaster! Poor guy! Where is he now?

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How easy will it be for Apple to muscle its way into the larger screen phone market pioneered by Motorola and Samsung?

Did they really pioneer? Their performance lags in every way! As Tim said he was waiting to get the technology to be ready to make bigger phones. Now apple has 64 bit. Faster processors, screen area is more and hence sapphire glass. This is how you perfect anything. These companies pioneered shit. They are selling low quality goods by applying third grade make up.

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how the groundwork laid by iPhone 5c in moving Apple into more direct competition with its phone industry competitors has historical precedence.

I dont agree. Apple should not have made 5C phone at all. Its not best work. And it did not lay any good road for apple to master its operations to maintain many models as you said. // My opinion.

Did they really pioneer? Their performance lags in every way! As Tim said he was waiting to get the technology to be ready to make bigger phones. Now apple has 64 bit. Faster processors, screen area is more and hence sapphire glass. This is how you perfect anything. These companies pioneered shit. They are selling low quality goods by applying third grade make up.

Yes they did, and it seems like Apple is following their lead. It's no secret that many people want a larger iPhone. Do you think that they'd want one if the competition hadn't introduced it?

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

Apple achieves tremendous "economies of scale" by using essentially the same high-quality aluminum casing for both the iPhone 5 and 5S for at least a four-year run, keeping retooling costs to a minimum. If you watch the company's video you can see that the casing is expensively machined much like a MacBook Pro or a Leica camera. Also the casings for the 5C is the highest quality "unapologetic" plastic of highest durability, fit and finish. So when many pundits arbitrarily call for the rush to different screen sizes, Apple always carefully orchestrates the best timing of its product rollouts to match its relative demand and supply balance, while keeping an eye on optimizing production-run capabilities and feasibilities. (The stock balancing of the 5C with all the color, carrier, and memory capacity iterations must be maddening on a world-wide basis.) I'm convinced more than ever that Tim Cook knows what he is doing to masterfully manage this complicated outsourcing of production and product delivery while keeping staff lean and mean. (Reports say that Apple is selling 80% of the phones over $500 in China and that that market at China Mobile is surpassingly 27% of total sales! I can't wait to see the robust demand for the iPhone 6, especially as China Mobile is fervently expanding its 4-G network. Also Angela Ahrendts will be on a mission to expand the Chinese Apple retail stores from 13 at present to perhaps 70, as Burberry has in China at the moment. Most Americans don't realize that Apple's business in the US now constitutes only 30% of its overall business. What a long runway ahead in the smart phone universe!)

How easy will it be for Apple to muscle its way into the larger screen phone market pioneered by Motorola and Samsung?

Umm... I'd argue that Apple pioneered the large screen phone market. When the iPhone debuted back in 2007, its 3.5" display was considered large. Most smartphones back then had screens the same size as the iPod.

Larger screens came into play when they all realized they couldn't compete with Apple when the hardware was about the same; 3.5" display, 3G, etc... They had to move to more "advanced" features - They all pushed "4G", which REQUIRED a larger device footprint in order to support a larger battery and larger chipset, ergo, the move to larger displays.

​And I don't understand any kind of need to "muscle" into a market. Just release a larger screenediPhone and it will sell.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.

Yes they did, and it seems like Apple is following their lead. It's no secret that many people want a larger iPhone. Do you think that they'd want one if the competition hadn't introduced it?

Probably. Not as high as the demand is currently had there not been such a wide variety of larger screen phones now, but yes.

I agree _to an extent_ with them being pioneers, but there's a reason Samsung and Moto have not been able to penetrate the smaller form factor, high end market and it's not for lack of demand for that segment. Instead it seems like a move to differeinaite themselves from the iPhone which makes it a game of marketing numbers - besides the Note line, I can't think of many large screen phones that take advantage of the larger display other than making text and images larger.

However, it's hard for me to wrap my head around, mainly because I don't care for the trend of phone sizes increasing (I wanted a larger phone back in the day, but the 4" iPhone 5 satisfied that for me). What's more important is the functionality and portability in my eyes.

I respectfully disagree with you. The 5C expanded iPhone availability to those price conscious consumers. In addition, it allowed Apple to test creating two new popular iPhone lines concurrently.

But if they didn't have the 5C they would have kept the iPhone 5 in that category. Were the colour options enough to make it a success compared to what the iPhone 5 would have sold? How does the R&D for the 5C plus the move to a plastic chassis affect the cost?

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I totally disagree that any Android manufacturers "pioneered" large phones. That wording gives them far too much credit. Copying something and making the fake 1 inch larger is not praiseworthy and hardly innovative. If I paint the Mona Lisa on a canvas that's 2 inches bigger than the original, is that being innovative? Hell no.

The truth is that nobody could compete with Apple on same sized phones. Android manufacturers were forced into a corner, and that's why they started making larger and larger phones. Making larger phones is not innovative, and it's easier to make a larger phone than a premium normal sized phone like the iPhone. Since they could not compete with Apple, they tried to differentiate themselves by having larger phones.

Now that Apple will soon be releasing larger sized phones, Android makers will once again be in big trouble, because Apple will own all size categories, from small to large, and Android will not be able to compete. The main problem with Android of course, is that it doesn't really matter what size phones they make, they're all garbage, from 0.1 inches to a 12 inch phone, due to the crappy OS.

Yes they did, and it seems like Apple is following their lead. It's no secret that many people want a larger iPhone. Do you think that they'd want one if the competition hadn't introduced it?

Inadvertent pioneers.

Big screens came about because Android was very energy inefficient early on, and these devices needed a large battery to compete, so why not add a large screen?

There still isn't any form factor competitor to the iPhone, and if Apple does produce a large screen iPhone, it will almost certainly redefine the form factor for Phat phones

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Originally Posted by SolipsismX

But if they didn't have the 5C they would have kept the iPhone 5 in that category. Were the colour options enough to make it a success compared to what the iPhone 5 would have sold? How does the R&D for the 5C plus the move to a plastic chassis affect the cost?

I think that Apple wanted to move to a different build as well; almost everything else in the Mac and iOS lines are machined housings, and the 5c is primarily molded. Having all of your products tied to a similar build has downsides although Apple seems to have been able to accommodate this so far.

I totally disagree that any Android manufacturers "pioneered" large phones. That wording gives them far too much credit.

The truth is that nobody could compete with Apple on same sized phones. Android manufacturers were forced into a corner, and that's why they started making larger and larger phones. Making larger phones is not innovative, and it's easier to make a larger phone than a premium normal sized phone like the iPhone. Since they could not compete with Apple, they tried to differentiate themselves by having larger phones.

Now that Apple will soon be releasing larger sized phones, Android makers will once again be in big trouble, because Apple will own all size categories, from small to large, and Android will not be able to compete. The main problem with Android of course, is that it doesn't really matter what size phones they make, they're all garbage, from 0.1 inches to a 12 inch phone, due to the crappy OS.

Hey now, Android isn't _that_ bad, I quite liked it on my Nexus 4 in the day - but what Samsung does to it really gives Android a bad name. However, that being said, I agree that iOS is the superior platform which will really hurt them as Apple expands their offerings into the large screen segment.

Here's to hoping, though, that while Apple pushes into the large screened phone market they keep the 4" form factor around for awhile - I don't know if I'm the minority, but I was happy when the 5S stuck to 4", and while dependent on the appeal of the 6, I'll still most likely upgrade to the 5s.

Here's to hoping, though, that while Apple pushes into the large screened phone market they keep the 4" form factor around for awhile - I don't know if I'm the minority, but I was happy when the 5S stuck to 4", and depending on how appealing the 6 is, I'll still most likely upgrade to the 5s.

I agree that Apple should not abandon smaller sized phones, and I strongly doubt that they would that. They're not dumb.

This way, when the new iPhone models come out, people will have a choice. They'll all be great phones of course, running the world's best mobile OS on the most powerful and advanced hardware, but some people have tiny hands and some people have gorilla sized hands, so everybody will end up happy.

Did they really pioneer? Their performance lags in every way! As Tim said he was waiting to get the technology to be ready to make bigger phones. Now apple has 64 bit. Faster processors, screen area is more and hence sapphire glass. This is how you perfect anything. These companies pioneered shit. They are selling low quality goods by applying third grade make up.

I dont agree. Apple should not have made 5C phone at all. Its not best work. And it did not lay any good road for apple to master its operations to maintain many models as you said. // My opinion.

I respect your opinion but i disagree mostly because i think iPhone 5c will have a bright future, if the rumors are true that Apple is planning to launch another revolutionary phone like they in 2010 with iPhone 4, the iPhone 5c will become a direct competition to new iPhone 2014 all because of the price

I respectfully disagree with you. The 5C expanded iPhone availability to those price conscious consumers. In addition, it allowed Apple to test creating two new popular iPhone lines concurrently.

That is what Apple say. But its really not. Those people who were buying cheap phone when THE iPhone arrived, were in queue to and realized how much money they have. Its just publicity stunt. Apple just did not sell as many as iPhone 5 devices as they expected. So, they have given plastic clothes to its inner skeleton and sold it as iPhone 5C. Sorry brother. I dont agree with you.

I respect your opinion but i disagree mostly because i think iPhone 5c will have a bright future, if the rumors are true that Apple is planning to launch another revolutionary phone like they in 2010 with iPhone 4, the iPhone 5c will become a direct competition to new iPhone 2014 all because of the price

No they din't!, I think your forgetting that Apple released a product called the iPad!

iPad was success and Samsung and Motorolla followed Apple with larger phones

Wrong. The first big screen phones were released around the same time as the iPad, it's success was still not known. I also doubt that any company could have designed and released a phone in that short of time.

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

But if they didn't have the 5C they would have kept the iPhone 5 in that category. Were the colour options enough to make it a success compared to what the iPhone 5 would have sold? How does the R&D for the 5C plus the move to a plastic chassis affect the cost?

No. The design of the 5 and 5s are extremely difficult to assemble. Apple probably had two thoughts in creating the 5c...

1. Devote all current iPhone 5 assembly lines to produce the 5s (which is even more difficult to assemble thanks to Touch ID).

2. Design a new model that is much easier to manufacture to replace "last year's flagship model".

I'm guessing in the long run it was much more cost effective to create a brand new model than it was to add assembly/manufacturing lines to stick with the iPhone 5 and the new iPhones 5s.

From this point on, we'll see two design aesthetics; the high precision, highly refined flagship model, and the colorful plastic model. We will no longer see "last year's flagship model" - it will be dropped and those components will be used for the plastic model. Only "last year's C model" will stick around.

But if they didn't have the 5C they would have kept the iPhone 5 in that category. Were the colour options enough to make it a success compared to what the iPhone 5 would have sold? How does the R&D for the 5C plus the move to a plastic chassis affect the cost?

We will never know what the 5 would have done. But many people want new phones rather than last year's model. Also many put color near the top of their selection criteria.

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Originally Posted by allmypeople

This isn't meant as a shot at Apple but I really hope they learned something about colors with the 5c.

I don't know anyone who has looked at the colors and said "that looks so good!"

Haha. Can't be any worse than the iMac color / designs back in the day.

Quote:

Originally Posted by Chandra69

That is what Apple say. But its really not. Those people who were buying cheap phone when THE iPhone arrived, were in queue to and realized how much money they have. Its just publicity stunt. Apple just did not sell as many as iPhone 5 devices as they expected. So, they have given plastic clothes to its inner skeleton and sold it as iPhone 5C. Sorry brother. I dont agree with you.

Your logic doesn't add up. Powering the display is the largest drain on a smartphone battery. The energy used by the OS is just a fraction of what the display uses.

They popped up as a way to add LTE to the phone. The cultural change for a large display phone as a partial or complete replacement for a traditional "PC" was just dumb luck for the Android-based OEMs.

Quote:

Originally Posted by jungmark

We will never know what the 5 would have done. But many people want new phones rather than last year's model. Also many put color near the top of their selection criteria.

I agree that was most likely Apple's reasoning, as well as a possible increased cost for the iPhone 5 casing, but I do think it muddies the water when you release a high and mid-tier device at the same time. If they want to do this I'd prefer if they release the iPhone 5C replacement in a colorful plastic casing right after WWDC with iOS 7.x and then have an event for the next iPhone in the Autumn as usual which will come with iOS 8, and all other devices will be updated to iOS 8 that same week. This would probably give a bump to the mid-range in the Summer.

Yes, all the people who keep fretting over how many Apple sold, whether it was successful or not, etc. The C product will fill the low to mid range quite nicely. The phone is actually really nice not like other manufacturers cheap plastic. My guess is this year we'll see a C style phone with new colors. And I wouldn't be surprised if it gets a bigger screen to go along with it. I'm hoping this is the year Apple finally ditches the numbering scheme for iPhones. Having new phones called 6 and 5SC seems dumb.

I dunno. I always viewed the 5c as a supply chain play, pure and simple. By switching the shell and internals over from a time-consuming CNC-machined aluminum shell to a much simpler-to-manufacture plastic shell with stamped steel framing for the 5c, Apple ensured that the mid-tier iPhone model would not create a production bottleneck that could affect supply for the iPhone 5s.

If Apple kept the iPhone 5 in production as the mid-tier model, they would have had to double their CNC aluminum machining capacity in order to accommodate demand for both the 5 and 5s. By discontinuing the 5 and switching the 5c over to a faster and less expensive production method, Apple raised the margins for the mid-tier model and switched the iPhone 5 lines over to the 5s without needing a huge increase in machining capacity. And the 5c presented a new marketing opportunity for Apple that keeping the 5 would not have had.

When the iPod was Apple's volume leader, they never had any issue with multiple form factors, colors, and capacities. Even now, with the iPhone, Apple still has to consider the different carrier configurations and regional variants. When the iPhone 6 comes out, it will have a new body style, so moving the 5s to the middle tier and the 5c to the entry level would essentially keep the production distribution similar to what Apple has right now. The wild card would be if the new iPhone lineup includes two different sizes.

I've never been a fan of Apple's name choices but I have to think even they think iPhone 6CS is wrong.

They did have an "iPhone 3GS", so "6CS" isn't too far out in left field. (And I understand the "3G" is in reference to the mobile standard.) However, I do tend to agree with you, and my use of "6CS" was just as a placeholder to distinguish a newer plastic model with the same industrial design as the previous model.

With two distinct lines now, Apple may have to reconsider their naming conventions. What that would be, who knows?

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.

They did have an "iPhone 3GS", so "6CS" isn't too far out in left field. (And I understand the "3G" is in reference to the mobile standard.) However, I do tend to agree with you, and my use of "6CS" was just as a placeholder to distinguish a newer plastic model with the same industrial design as the previous model.

With two distinct lines now, Apple may have to reconsider their naming conventions. What that would be, who knows?

The iPhone 3G was the flagship phone and the 3GS was the next flagship phone with that same case design. I don't see how that's in any way comparable to the midrange iPhone 5C becoming the iPhone 5CS. I don't put it past Apple but I hoping they don't go with that.

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This article makes no sense. Apple has been producing multiple colors of its products since the second generation iMacs way back in the 1990s, plus multiple colors of iPod nanos for years. What lessons could Apple possibly have learned about managing 5 colors of iPhone 5C inventory when it had already spent years doing the same thing for iPod nanos?

This article makes no sense. Apple has been producing multiple colors of its products since the second generation iMacs way back in the 1990s, plus multiple colors of iPod nanos for years. What lessons could Apple possibly have learned about managing 5 colors of iPhone 5C inventory when it had already spent years doing the same thing for iPod nanos?

Lots of lessons. Those translucent plastic casings on the iMacs aren't the same as on the iPhone 5C. If you really think that a colour is the same regardless of where it's placed then explain why they had white Macs starting in the 90's, and white iPods and even a white iPhone in 00's, yet had to delay the white iPhone 4 almost a year after it was initially promised.

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After releasing iPhone 4 in June 2010, the company struggled to perfect the production of its planned white version until April 2011. That highlights the complexity of the product development and operational challenges involved in managing the production of devices on the scale of iPhone.

I think this is slightly mis-worded, in that the issue is not about achieving scale of production generally - it was about the specific design that Apple were trying to implement with iPhone 4. That may seem like a small change, but I think it's actually very meaningful.

I say this because one thing Apple is very good at is a very quick ramp up to high scale for a new product line, which is - operationally and logistically - extremely challenging. Apple definitely owes Tim Cook a lot of kudos for leading the creation of that system.

This article makes no sense. Apple has been producing multiple colors of its products since the second generation iMacs way back in the 1990s, plus multiple colors of iPod nanos for years. What lessons could Apple possibly have learned about managing 5 colors of iPhone 5C inventory when it had already spent years doing the same thing for iPod nanos?

You're forgetting that the iPod doesn't have variants for different cellular radios, so its a multidimensional inventory management task to produce a SmartPhone in multiple colors versus an iPod in multiple colors.Edited by RadarTheKat - 5/1/14 at 8:47pm

I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.